[Click eStock] "Shinhan Financial Group, Continued Shareholder Return Expectations... Target Price Up"

Target Price Raised by 12.8% Compared to Previous Estimate

On the 19th, IBK Investment & Securities raised the target price for Shinhan Financial Group from 58,500 KRW to 66,000 KRW, citing continued expectations for shareholder returns. The investment rating was maintained at 'Buy.'

Researcher Woo Dohyung of IBK Investment & Securities explained, "The target price was raised by 12.8% compared to the previous level, reflecting improvements in return on equity (ROE) due to reduced provision expenses and an increase in book value per share (BPS) from share buybacks and cancellations."

Shinhan Financial Group's second-quarter earnings this year are expected to meet market forecasts. Researcher Woo said, "The controlling shareholder net profit for the second quarter is expected to be 1.2485 trillion KRW, a 0.8% increase year-on-year, in line with the consensus estimate of 1.3046 trillion KRW. Won-denominated loans are expected to increase by 3.6% compared to the first quarter, while the net interest margin (NIM) is expected to decline by 4 basis points (1bp = 0.01 percentage points)." He added, "The growth in won loans appears to be driven by large corporate loans, and the decline in NIM seems steep due to a decrease in core deposits and margin competition. However, interest income is expected to improve compared to the previous quarter, and from the third quarter onward, margin management is anticipated to reduce the extent of NIM decline."

A minimum announcement of 300 billion KRW in share buybacks and cancellations is expected in the third quarter. Researcher Woo stated, "Shinhan Financial Group announced a dividend policy for 2024 to pay a quarterly dividend of 540 KRW per share, with an annual total cash dividend expected to be around 1.1 trillion KRW. Since 450 billion KRW in share buybacks and cancellations have already been announced through the third quarter, at least 300 billion KRW in share buybacks and cancellations is expected to be announced with the third-quarter earnings report, which corresponds to 39.4% of the annual controlling shareholder net profit of 4.7 trillion KRW." Although the common equity tier 1 (CET1) ratio is expected to decline in the second quarter due to won loan growth compared to the first quarter, it is forecasted that appropriate management in the second half will maintain the CET1 ratio at a level that allows for shareholder returns.

This content was produced with the assistance of AI translation services.